WWW- For years, Penthouse staked out a middle ground in the mens’ lifestyle category between the relatively demure Playboy and the hard-core Hustler magazine. In the late ’90s, caught between Internet porn sites on one hand and laddie magazines on the other, Penthouse became more sexually explicit, costing it advertisers and newsstand circulation.

Now, Marc Bell [pictured] and Daniel Staton, who bought a bankrupt Penthouse in 2004 after founder Bob Guccione lost control of it, are betting they can win back advertisers and readers with softer pictorials and more lifestyle content. That process began with Diane Silberstein, who took over as president and publisher in January 2006, and will continue under Mark Healy, who becomes the magazine’s editor in chief Oct. 30.

Healy, who leaves his job as articles editor at Condé Nast’s GQ for the Penthouse post, said he intends to position the title as the sexual lifestyle authority. “There’s not a good magazine out there where you get what I consider a lively and contemporary discussion about sex and relationships,” he said. “There is a great opportunity to focus on what Penthouse does better than anybody else in terms of the sexual content.”

He also plans to continue the new emphasis on humor and service; the magazine has recently added a humor column, car and consumer electronics reviews and advice on health and grooming-all similar to competitors.

Under Silberstein, a onetime Playboy exec, Penthouse stopped running photos depicting graphic sex acts. Readers, she said, “want to see a hot girl in various stages of undress, but they also want something left to the imagination.”

Penthouse has stopped taking ads with strong sexual content, resulting in a 4.1 percent drop in ad pages year to date, according to the Mediaweek Magazine Monitor. But circulation has increased. The title is back at many more Borders and Barnes & Noble outlets, and paid and verified circ was up 2.9 percent, to 366,024, in the six months ended June 30, according to the Audit Bureau of Circulations.

Silberstein said that the magazine has won back such advertisers as Maker’s Mark, Jose Cuervo and Lifestyle condoms.

But the magazine hasn’t evolved enough for some clients, who still find it too hard-core, said Kim Abend, vp, associate media director at FCB. She wonders if readers will stick with the new version. The Catch-22 for Penthouse, she said, is that while a softer image may attract ads, it risks turning off existing readers and losing its distinction from the 3-million circ Playboy.